Do Indian Techies Deserve American ire; Is Protectionism the Answer?

In the days, when emptying malls, foreclosed homes and thinning traffic, have become the part of existence of a once-booming nation, should its people be blamed for demonizing India? The global BPO market is abuzz with the possibility of a mob backlash against India. When the current economic climate forces the world’s number one preacher of free market economy consider protectionism as the way out, then it is evident that the world is geared for some big changes. How the world economy will take shape in the upcoming years is a different issue altogether. Let us stay focused to our point---is an American anger against Indian BPO techies justified?

Now it can not be answered by a single yes or no; we have multiple aspects to consider. The typical Indian perspective is: why blame us and why not the Chinese, who have made some $2 trillion out of US off-shoring alone? However, the best Indian argument comes possibly from Nandan Nilekani, Infosys co-chairman and the author of the recent best seller, Imagining India. He points out that unlike China, India has no trade surplus and has to depend on export to allow its GDP grow at a healthy rate. According to Nilekani, off-shoring, especially tech export is essential for the survival of India as a nation because a slow growth rate of GDP may lead to a popular upsurge by those failing to reap benefits of a tech boom. The foresighted businessman’s answer to US government’s projected visa restriction is: “Trade is a two-way street. We need to keep the movement of people open.”

And this is a million dollar statement. When it comes to assessing socio-economic impact of IT, legal or any other offshore outsourcing on American economy and its people, we must consider it against a wider backdrop of labor and capital and not the products or output alone. A few years ago, McKinsey & Co made a report for Nasscom, the representative body of Indian software industry, on the impact of Indian outsourcing on the US economy and jobs. It made a conclusion that would not be believed by majority of Americans; for the McKinsey report simply concluded that Indian outsourcing had a positive impact on American industry and economy---by making the American companies more efficient, the Indian off shoring actually contribute to American job growth.

From Bernie Madoff and Wall Street scam and AIG bonus to millions losing their jobs---
Americans had enough of it. It’s not that US government is not sensing the heat; rather it is braced for an impact. In the mean time to keep the public emotion in check, it is trying to take shelter under the cover of protectionism. But it is the US government itself, which is fully aware of the drawbacks of protectionism---instead of rescuing it from the danger; it may lead the economy to ultimate peril. With USA starting to practice protectionism, soon the entire world will be under its grip and that will be catastrophic for our global village. Thus, answer is not in venting anger against a specific nation, or in adopting protectionist policies or in tightening H1B and L1 visa rules. The Americans should realize that business outsourcing do stimulate industries to some extent. It is the proponents of casino capitalism, who are to be feared. Before US starts wielding protectionism it should keep this historical fact in mind---over-protectionism eventually let the other players take hold of the market.

Niyamath Parveez